Novo Nordisk pulls Tresiba in Germany on pricing dispute

Germany's tough price negotiators went too far for Novo Nordisk. The Danish drugmaker is pulling its new diabetes drug Tresiba off the market after authorities said they'd price the long-acting basal insulin on par with old human insulin injections.

Novo ($NVO) said the pricing decision didn't acknowledge Tresiba's "important benefits" and that accepting the offer would undermine its R&D efforts.

Novo Nordisk EVP Jakob Riis

"We are very sad that it has not been possible to reach a price agreement with the insurance fund," EVP Jakob Riis said in a statement. Accepting the German pricing offer "would not be in the best interest of the millions of people with diabetes for whom current treatments are insufficient to control their disease," he said. The company will keep supplying Tresiba to current patients through the end of September.

Sydbank analyst Søren Løntoft Hansen said he wasn't surprised by Novo's decision to pull Tresiba out. "The German authorities want to price Tresiba in line with human insulin, which has been on the market for 30 years," Hansen told Ritzau Finans.

Plus, many other countries use Germany's pricing decisions as a reference for their own pricing. If Novo accepted the German offer, it could have a cascading effect around Europe. German sales don't make up a large share of Novo's top line, so it's willing to sacrifice revenue there to protect its pricing power elsewhere, Hansen said.

Novo isn't alone in suffering at the hands of Germany's cost-effectiveness watchdogs, which won new powers in a budget squeeze several years ago. Eisai pulled its seizure drug Fycompa off the market in 2013 after the Institute for Quality and Efficiency in Healthcare (IQWiG) said it didn't deserve to be priced higher than older generics. The Japanese drugmaker tried again last year, only to suffer another smackdown. Eli Lilly ($LLY) and Boehringer Ingelheim initially chose not to launch their diabetes treatment Tradjenta in the country because of its approach to pricing. And after initially launching their new SGLT2 diabetes treatment, Forxiga, in Germany, AstraZeneca ($AZN) and then-partner Bristol-Myers Squibb ($BMY) decided to pull out for pricing reasons in December 2013.

Still, Germany's pricing decision on Tresiba must be a disappointment to Novo. After initially deciding not to launch there, it rolled out Tresiba in Germany last year, citing recent decisions that seemed to reward innovative drugs. And it's just the latest setback for the drug, which is important to Novo's growth aspirations. Tresiba ran into a major hurdle in the United States in late 2013, when the FDA refused to approve it without a cardiovascular safety trial. A potential turnaround is afoot though; the agency recently agreed to reconsider the drug based on interim results from that safety trial, DEVOTE, in a move that could get the drug on the U.S. market next year.

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Special Report: Top 10 best-selling diabetes drugs of 2013 | The 25 most influential people in biopharma today - 2013 - Jürgen Windeler - The Institute for Quality and Efficiency in Health Care (Germany)